Tokyo stocks end lower; China, Hong Kong bounce

'Bear hasn't called it a day,' Hong Kong market watcher says

ChrisOliver

HONG KONG (MarketWatch) -- Japan's Nikkei declined for a fourth straight day on Friday, with Toyota Motor Corp., Sony Inc. and other export-oriented shares losing ground as the yen held its recent strength. Shares in Hong Kong and China notched slight gains.

The Nikkei 225 Stock Average (1804610) closed down 1.4% at 17,217.93 and the broader Topix index shed 1.1% to close at 1,721.59.

Outside of Japan, regional markets ended mostly lower as investors remained skittish in the wake of the global equities sell-off this week.

Some bargain-hunting did, however, kick in. China's Shanghai Composite Index, which tracks shares on the larger of China's two bourses, ended up 1.2% at 2,831.53. The Shenzhen Composite Index, which tracks shares on the small exchange, finished up 1.5% at 730.55.

Hong Kong's Hang Seng Index (1804580) gained 0.5% to 19,442.01 at the finish. The Hang Seng China Enterprises Index, a gauge of Hong Kong-listed shares of mainland companies, gave up early gains to end down 0.3% at 8,985.91.

In company moves, South Korea's Posco Ltd.
PKX, -1.07%
ended 3.1% higher after U.S. investor Warren Buffet disclosed Thursday that his Berkshire Hathaway Inc. has accumulated a 4% stake in the world's third-largest steel maker. See full story.

Analysts cautioned that regional share indexes could post further declines next week because of concerns the government may introduce new macro-economic tightening measures to cool speculative activity.

"Ahead of the [Chinese] National People's Congress meeting, investors will become increasingly jittery about what new austerity measures will be implemented," said Louis Wong research director at Phillip Securities in Hong Kong.

"The risk appetite is changing very rapidly, despite the market being up."

Late in the afternoon Friday, China's State Administration of Foreign Exchange said it would lower the amount companies can borrow overseas in a bid to boost onshore foreign-currency debt holdings. The statement on the regulator's Web site gave no details on the new ceilings on foreign debt.

'There is a lot of selling pressure and I think there is a domino effect, the bear hasn't called it a day yet and he will come back next week.'
Francis Lun, Fulbright Securities

Although the Hang Seng closed higher, gains narrowed in the afternoon as investors shifted to a more cautionary mood after many small stocks popular among retail investors took a tumble. Shares of Sunlink International Holdings (2336)(2332) fell 16.4% while Catic International Holdings (232)
H, +0.74%
was down 31%.

"It's a rout of the speculative third and fourth liners," said Francis Lun, general manager of Fulbright Securities in Hong Kong. "There is a lot of selling pressure and I think there is a domino effect, the bear hasn't called it a day yet and he will come back next week."

In late Tokyo currency trading, the dollar bought 117.74 yen, compared to 117.57 yen late in New York and 118.10 yen late in Tokyo the previous session. A stronger yen tends to hurt Japanese exporters because it makes their products more expensive in overseas markets. See Currencies.

Shares of property firm Mitsui Fudosan Co. (8801) gained 1.5% after government data showed Japan's core consumer price index remained flat in January, the first time in eight months that the inflation gauge has shown no change.

Analysts said the weak inflation data raised expectations that the Bank of Japan would refrain from additional interest-rate increase until after July parliamentary elections. Japan excludes fresh-food prices from its calculation of the consumer price index.

Shares of Nippon Telegraph (9432) and Telephone Corp. were down 3.5% after the company said two fixed-line business units expect profits to fall in fiscal 2007 owing to declining revenue from traditional phone operations.

Decliners also included Sharp Corp. (6753), which fell 2%. Wire reports cited an Asahi daily newspaper report that the electronics maker will soon proceed with plans for a 200 billion yen ($1.7 billion) factory to produce large flat-screen televisions in Japan.

Telecoms hold their ground; oil companies mixed

Chinese telecom stocks led gains in Hong Kong as investors swooped on shares that had fallen earlier in the week.

Shares of wireless operator China Mobile
CHL, -0.64%
(941) rose 0.5% to HK$71.60 ($9.17), with buying interest fuelled after UBS lifted its price target on the stock to HK$108 from HK$80. The shares had fallen 10% in the past four sessions.

China Life Insurance Co. (2628),China's largest insurer by revenue, reversed earlier gains to end 0.7% lower while China Construction Bank (939) also shed earlier gains to end flat.

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